It is serendipitous that on the day the House Ways & Means Committee holds a hearing on trade and globalization, the President will be in Peoria, Illinois at NAM member — and exporter extraordinaire — Caterpillar.
We’ve said in this space before that there are a handful of US manufacturing names that rise to icon status, whose names, brands and logos are synonymous with durability and quality the world over. Caterpillar is one of those companies. For anyone who has stood on the floor of that plant in Peoria (as we have), the manufacturing vibe is damned near overwhelming. All around you are giant yellow parts of machines eventually being made into giant yellow machines, some as tall as a house. The President will see it all today.
But more important to the trade discussion is where those big machines go. Over half of all Caterpillar products are exported. In 2006, they exported over $10.5 billion worth of big yellow stuff to some 200 countries. Cat’s exports to China alone have increased 40%. The net effect of that is an additional 5,000 new production jobs in Peoria and elsewhere.
Hopefully the President will touch on the benefits of free trade agreements (FTA’s) that open markets to US-made goods. Cat’s exports to Australia have risen 26% since the Australia FTA was signed. CAFTA lifted tariffs on Cat-made goods in Costa Rica alone by 14%. When you’re talking about equipment that weighs many tons and are quite expensive, that 14% tariff is a whopper. Since the Chilean FTA, Chile has become Cat’s fifth largest market. You may recall Cat CEO Jim Owens spoke to National Manufacturing Week about trade last year in a speech that was very well-received. Here’s a link to that great speech, making the point that many small and medium manufacturers benefit with the boost in Cat’s exports.
Here’s a fact sheet on FTA’s in general and Here’s a fact sheet on trade. Let’s hope when the folks gather down at the Ways & Means Committee today they actually take a moment to ponder the facts. The facts are that trade is good for US manufacturers and our workers. Just ask the folks in Peoria.
UPDATE (By Carter Wood, 9:12 a.m.): The Washington Post leads its business section this morning with a timely, telling story, headlined, “U.S. Exporters Feel Favorable Trade Winds.” The lede:
EDEN PRAIRIE, Minn. — Inside the factory, engineers tinkered with machines that test how well tires hug slick roads while others trained customers on running additional gear.
Only a few years ago, MTS Systems sold its testing equipment mainly to American automakers. No longer. The tire-testing machine was bound for South Korea. A road simulator was headed to a Formula One auto-racing team in Europe. The customers were visiting from Shanghai.
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